The National Company Law Appellate Tribunal observed that it is pertinent for the adjudicating authority to discern, first, whether the directors or promoters of the company are barred by the conditions mentioned in the provision; secondly, whether the resolution plan submitted by them is in accordance with section 30 of the IBC, and; thirdly, whether a majority of the creditors in accordance with the IBC agrees with the resolution plan submitted by such person. If all these three conditions are met, the promoter will not be barred by section 29A of the IBC.
In the instant case Sreeram E. Techno School Private Limited v. Beans and more hospitality private limited two issues were raised before the NCLAT:
Whether the resolution applicant, being the erstwhile promoter, is barred from filing the resolution plan in terms of Section 29A of IBC?
Whether the issue of viability, feasibility and other conditions of the Corporate Debtor can be looked into by the Adjudicating Authority or by the NCLAT?
With regard to the first issue, The NCLAT refused to accept the Appellant's initial submission, stating that the IBC does not prohibit a promoter from filing a resolution application, even if the promoter is disqualified under Section 29A of the IBC. Furthermore, there is no evidence on file that the Corporate Debtor is an undischarged insolvent or a willful defaulter under the Reserve Bank of India's guidelines issued under the Banking Regulations Act, 1949; or that the Corporate Debtor has an account classified as a "Non-Performing Asset" under the Reserve Bank of India's guidelines at the time of submission of the resolution plan; or that the promoter or its directors have been convicted for any criminal offence, any offence punishable by imprisonment; or was disqualified from acting as a director under the Companies Act, 2013; or was prohibited by the Securities and Exchange Board of India; or made any preferential transaction, undervalued transaction, granted extortionate credit transaction, or engaged in a fraudulent transaction, etc.
With regard to the second issue, it was held that in response to the Appellant's second submission, the NCLAT stated that even though the Corporate Debtor is not a going concern, a resolution plan cannot be dismissed on that basis if the resolution applicant can demonstrate the company's future viability. The question of a Corporate Debtor's viability, feasibility, and other factors as stipulated by the Insolvency and Bankruptcy Board of India can be investigated by the CoC, which has financial competence. The Adjudicating Authority and the NCLAT are unable to investigate such questions of viability, feasibility, and other conditions of the Corporate Debtor. Since the CoC had gone over the financial aspects of the project, including viability, feasibility, and other terms.
Hence, NCLAT upheld the order of the Adjudicating Authority, approving the resolution plan submitted by the successful resolution applicant and stating that the successful resolution applicant proposed to pay 100% dues of all the financial creditors with interest including the Appellant, hence no interference is called for and the appeal was dismissed.